More than 25 percent of Yankee Group survey respondents say they expect at least a third of their infrastructure to move to cloud computing in the next 12 months, but company-wide adoption remains low. To uncover what lies ahead for cloud computing in 2010, Yankee Group interviewed executives from 25 cloud computing pioneers—including early cloud service providers, telecom operators, and infrastructure and software vendors. Their unique perspectives and key strategies tout the power of the cloud and offer a view into its impact: Will cloud computing be an evolution or a revolution?

Zeus Kerravala and I were delighted to have three cloud thought leaders join us for today’s webinar:

• Doug Hauger, General Manager, Microsoft Windows Azure
• Raj Nathan, Executive VP and Chief Marketing Officer and Senior VP, Sybase
• Jayshree Ullal, President and CEO, Arista

The discussion was lively and thoughtful–a special thanks to each of them for taking the time do join us. A replay of the webinar is below. We’re also offering a complimentary download of the report that inspired this webinar: “Clouds in 2010: Vendor Optimism Meets Enterprise Realities.” Register as a guest for access.

The webinar runs about an hour: audio (mp3) and slides (pdf).

After months of collaborative works with a team of seasoned analysts, our special report on cloud computing entitled Clouds in 2010: Vendor Optimism Meets Enterprise Realities finally came to a completion. Our interviews with 25 cloud computing thought leaders about technology milestones and their metrics to measure success were inspirational and thought provoking.

On the agenda of the business executives we interviewed, cloud computing is an act for action. From enabling the use of cloud computing services to deploying enterprise-specific cloud computing models, business leaders are full of excitement. Their optimism is not without reason.

First, the new economic reality is driving enterprise customers to look for innovative IT solutions to keep their businesses afloat, if not prospering as they used to be. Also, technology barriers to move workloads into the cloud continue to fall as more vendors are taking an active role in addressing pertinent problems associated with service reliability, security, and interoperability. It could be in the form of strategic partnerships such as the technology coalition between Cisco, VMware, and EMC to boost the deployment of enterprise-class private clouds; and goal-oriented investments such as the acquisition of Cassatt by CA to expand its expertise in meeting the changing requirements of today’s data centers.

I agree that these are good signs of a potentially innovative market development. But healthy market dynamism should be based on a fine balance between an optimistic supply and a realistic demand. With growing pressure to control costs without compromising performance, one can only guess today’s corporations’ next moves. How do enterprise customers approach cloud computing in these days? Are they approaching the cloud with greatest ease?

The recent history of IT transformation in the business world should be a good indicator. On the demand side, business transformation initiatives are far from ending. From bandwidth utilization, IT automation, to cloud service management, the power of cloud computing has whetted corporate appetite for productivity at low cost. The growing availability of IT as a service will essentially shift IT’s role from managing hardware and software to managing services and providers.

Will 2010 be a banner year for cloud computing? Let’s prepare to review the special report with multiple lenses.

Earlier this week, IBM revealed its financial commitment to invest further in cloud-enabled facilities; building the 80 million ( New Zealand dollar) worth of data center in Auckland, which is scheduled to be completed in 2010, and adding a new research laboratory in Hong Kong for the development of cloud-based collaborative applications.  According to Joe Dzaluk, vice president of infrastructure services at IBM, investing in new facilities is part of the company’s three-year program to update and expand its worldwide network of 488 data centers ( including both IBM owned and client data centers managed by IBM).

From a quantitative point of view, having a total of 488 data centers is already a fairly resourceful asset.  Seemingly, IBM is not investing for quantity purposes.  What is the motive behind the move?  How can the technology giant possibly profit from its infrastructure investment?

IBM is making its bet on two enterprise demand trends, namely data center outsourcing and cloud computing adoption.

Data center outsourcing is not a brand new demand but there is a sign of growing in the mid-sized and large enterprise segments.  As CIOs come to terms with rapid equipment depreciation, increasing power consumption, and surging maintenance costs,  data center outsourcing makes business sense.  Together with the constant pressure to reduce costs and control IT spending, more and more business organizations are turning to IT outsourcers for help.   This is evident in Yankee Group Anywhere Enterprise—Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, one-third of enterprise respondents( with 500 or more employees) stated that 50 percent  or more of their data center resources are outsourced to a third-party provider for management and support.

In bad economic times, cost-savings is an obvious entry point for any emerging technology to get the attention of potential customers. The economics of cloud computing has caught the attention of enterprise customers that are looking for operational efficiency without compromising performance. As the economy has yet to fully recover, costs will continue to play a role in driving enterprise cloud adoption. According to our survey results, 59 percent of enterprise respondents (with 500 or more employees) estimate that more than 30 percent of their internal IT infrastructure (such as servers and applications) will shift to cloud computing services in the next 24 months.

For IBM, the two enterprise trends represent a tremendous growth opportunity.  But still, the technology giant is mindful when making its strategic move elsewhere.  Evidently, Asia Pacific is a region of growing interest for IBM to harness the cloud.

Will Asia Pacific be the direction of cloud diffusion?

To set the tone for cloud discussion, Yankee Group published a report last August to share our definition of cloud computing.  As we proceed the discussion with our enterprise clients, service providers, and technology vendors,  a few observations surface.

Although cloud computing has yet to reach mainstream popularity in the corporate world, CTOs are strategically reviewing various deployment models with great interest.  On the supply side, interviews with cloud-enabled providers reveal that there are a lot of activities already underway to support enterprises of all kinds.  What are the promises and pitfalls of existing cloud offerings?  Which business model will win the heart of enterprise customers in the near future and why?

Camille Mendler and I will be hosting a webinar named ” Pinning Down Cloud Computing” on 9/29/2009 at 11:00AM EDT to discuss these questions and more.   Stay tuned.

Cloud-like business models are all over the map. “Cloud hosting”, ” Managed public cloud”, “Virtual private cloud” and among others are flooding the market in leaps and bounds. Every provider seems to have a cloud computing story to tell. You may begin to question the credibility of some cloud-based offerings, if not all. You are not alone. Lately, I have received a number of inquiries asking for the clarification of emerging cloud computing models and cloud strategies.   What are considered as cloud offerings; what are not?  Is cloud computing simply a resurgence of the mainframe era with a new twist?  If  cloud computing is the future of Anywhere IT, where are we at this point in time?

I believe some of the answers to these questions will evolve over time as market dynamics continue to take shape.  But still, to be able to engage our clients with a flow of fruitful discussion about cloud computing, we must first bring clarity to the cloud.   Our latest Yankee Group Report, “Pinning Down Cloud”, written by a team of analysts covering various aspects of cloud computing, lays down the definition of cloud computing.

In essence, we define cloud computing as ” dynamically scalable, virtualized information services delivered on demand over the Intenet with multitenant capability, service-level agreements (SLAs) and usage-based pricing.”  We go on discussing the core components of cloud computing used in our definition.

Using this definition, it becomes clear to me that the majority of today’s hosting soltuions are no more than  repackaging of traditional applications with a “cloud-ish” label.  The lack of scalability and automation mechanism to support dynamic service provisioning  is a showstopper for hosting providers to create any credible cloud offerings.  Scalability and automation are a baseline; providers also need to look at the broader context of how such capabilities are used to transform enterprises, their employees, partners, and customers.  This may require years of hands-on experience and practice.  By then, providers should have the right tool and skill set required to play a different game in the cloud computing arena.  Surely not the name game, but one you can win.

What game are you playing?  Do you have the right skill to harden the cloud?